Decision on FDI in retail soon: minister

The Union minister of commerce and industry Kamal Nath said on Wednesday here that the government will soon decide on matters regarding foreign direct investment (FDI) in the retail sector and will be meeting key retail players to discuss the matter. Nath was speaking at the inaugural session of Images Fashion Forum (IFF) 2005.

"When you talk of FDI in mall development or the shopping sector development, you won't be disappointed for very long. We will meet and discuss this in the next couple of weeks," Nath said.

"Your industry is in the departure lounge ready to take off. I assure that we will give you a boarding card," he added.

At present, FDI in retail is not permitted, except through the cash-and-carry wholesale trading route.

Although a number of foreign retailers have entered the Indian market over the last few years, most players have been cautious and have preferred to adopt a wait-and-watch attitude.

The government is scheduled to review its stand on FDI in the retail sector in May. There are indications that foreign direct investment in the 'dedicated branded retail segment' will get the nod.

While big retailers have been campaigning for allowing FDI in the sector, on the other hand a large section of middle rung retailers in the country have been arguing against FDI in retail on the grounds that foreign competition will be detrimental to local retailers.

The minister said that in India only 2 per cent of retail, with 12 million outlets, is in the organised sector against 85 per cent in the US.

Acknowledging that retail sector is one of the sunrise sectors in the economy today and India has tremendous success stories to tell in the sector over the past six years. He said that there were fears of unemployment when talking about FDI in the retail sector.

"We will decide how FDI can be leveraged for overall increase in retail development in the country, without disrupting the existing retail environment," he added.

Said Kishore Biyani, managing director of Pantaloon Retail India, "The government of India would be wise not to open the doors to foreign retail too wide. It's better to develop India's own modern retail industry than give their businesses away to Walmart and Tesco.''

Biyani also urged the government to set up retail economic zones with single window clearance.

B S Nagesh, managing director and chief executive officer of Shopper's Stop, said the choice before India was to have the largest number of shoppers rather than the number of shopkeepers.

The fashion and retail industry has also been clamouring for the status of an industry and a big section within the industry wants retail sector to be under the wings and purview of a ministry.